The most important function of keratinizing squamous epithelia is their ability to drastically impede water loss from the body. In contrast, however, non-polar, lipid-soluble substances easily traverse regions which block the movement of water and polar substances. Whereas tight junctions regulate paracellular water and solute movement in non-keratinizing epithelia, early in our investigations we demonstrated that the structural basis for the barrier in epidermis was the deposition of lamellar lipid, not tight junctions, in the interstices of the upper stratum granulosum and stratus corneum (Elias, P.M., Friend, D.S.: J. Cell Biol., 65:180-191, 1975). These lamellae are seemingly derived from the expelled contents of unique secretory organelles (lamellar bodies, membrane coating granules) which expel their contents into the interstices of the stratum granulosum. After migration into the stratum corneum, the lamellar material coalesces into broad sheets which freeze-fracture like lipid, and seem to be sufficiently hydrophobic to induce fracture plane deviation away from the plasma membrane into the intercellular space.